What Buyers Miss When Co-Owning a Home — Insights From CoBuy CEO, Matt Holmes and Fred Glick of Arrivva

Here’s a glimpse of what you’ll learn: 

• The real problem with buying property together and the phases most people never plan for
• Why LLCs, DIY contracts, and “getting clever” can create legal and financial traps
• How a proper framework can guide planning, structuring, and managing co-ownership
• Why alignment and agreements before pre-approval matter more than you think
• The day-to-day realities that most buyers overlook, from mortgage payments to joint liability
• How blockchain, smart contracts, and secure agreements are changing co-ownership

In this episode with Fred Glick and Matt Holmes

Thinking about buying a home with friends, family, or partners? 

In this episode, Fred Glick of Arrivva sits down with Matt Holmes, co-founder and CEO of CoBuy, to reveal why most co-buying arrangements fail and how to do it right.

They break down the hidden risks of shared ownership, why LLCs and DIY contracts can backfire, and how poor planning can destroy both finances and relationships. Learn how the CoBuy Framework, CoBuy Wizard, and modern ownership tools help buyers align before pre-approval, avoid legal landmines, and plan for the buy, the hold, and the exit.

Don’t buy together without a plan. Watch to see how to co-own smart.

Resources mentioned in this episode

• Fred Glick on LinkedIn
• Arrivva
• Matt Holmes on LinkedIn
• CoBuy
• CoBuy Wizard

EPISODE TRANSCRIPT

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[00:00:27] Drew Thomas Hendricks: Drew Hendricks here. Welcome to the latest episode of We Fixed Real Estate. Today we have a really special guest on the show, Matt Holmes from CoBuy. And Fred Glick, who you all know.

Matt, welcome to the show.

[00:00:40] Matt Holmes: Thank you very much. Yeah, I’m stoked to be here guys.

[00:00:43] Drew Thomas Hendricks: Matt, tell us a little bit about yourself. It’s, and tell us a little bit about CoBuy. And we’ll, we’re gonna do a deep dive into what your service offers and why it’s so beneficial.

[00:00:52] Matt Holmes: Absolutely. So I’m Matt, I’m co-founder and CoBuy company that simplifies shared home ownership. So co-ownership goes by a lot of different names, but basically when friends, family members, unmarried couples, any combination of these people team up to buy and own a home. This looks a lot different actually from traditional home ownership.

So how we got our start is I started CoBuy with my mom in 2016.

[00:01:24] Drew Thomas Hendricks: Oh wow.

[00:01:25] Matt Holmes: Yeah. So we decided that we wanted to team up to buy and own a home together as an intergenerational household. Right. And so I know, Fred, this is something you’ve seen a lot of over the years, right?

[00:01:38] Fred Glick: Hmm, for sure.

[00:01:42] Matt Holmes: Okay. Yeah. So there were just so many sticking points, right? So from the outset, we had a lot of questions about our financial inputs, about how those would combine, about how we combine our financial inputs, about how we would go through this process.

And there were a ton of challenges, a ton of risks, a ton of unknowns. There were people who were ready to serve us, so real estate agents, lenders, escrow, attorneys, but there was no one kind of focused on the long term. So what co-ownership looks like the day we close on that home. As real estate and finance professionals, this is something that we were particularly interested in.

Like we saw this as multi-party investment management because that’s what it is, right? The day we close on the home, that’s just the start of this journey. No one was addressing that. And that was kind of like what sparked this whole thing. We call ourselves CoBuy. So fast forward we’re helping people tackle that process of buying and owning a home over the full ownership lifecycle.

But what really sparked this was like, if it’s tough for us, it’s gotta be really tough for a lot of other people because we had a back background, my background was investment banking. Pam and her husband, my stepfather have backgrounds in real estate and finance. So my stepdad, Brian’s been in construction for 40 years.

Pam has worked in insurance, she’s worked in sales. She’s a six sigma black belt. She was, Chief Quality Officer at GE Capital in the 90s. She’s built companies, sold companies. And so we were like, “Shit, if this is difficult for us, it’s gotta be really difficult for all different types of people.” And so we decided to tackle it. And the thinking there was, if we can make buying and owning a home together, simpler, safer, and protected, then what we’re doing is unlocking and accelerated path to home ownership.

 And so it really be, it wasn’t something that we decided, you know, in the beginning we set out to found CoBuy, to found a PropTech startup to found, a FinTech startup. It just kind of evolved out of our own experience and our own needs.

[00:03:58] Drew Thomas Hendricks: To break it down real simple for me and all the general audience, what was the problem before CoBuy? This is where two people, whether it’s two friends, a mother and a son, they, the challenge is making a legal contract to buy a house when you’re not married.

Is that where it boils down?

[00:04:19] Matt Holmes: So. Absolutely. Let’s take a step back. So if you think about like buying a car, right? People are like, “I want buy a car,” but you don’t actually wanna buy a car, you want to own a car. You want to derive the benefits from that car. There are different reasons you wanna have that car. Maybe you wanna look flash, maybe you need to get to work, maybe you need to take your kids to school and get to your job. But buying the car itself is just the start of where the benefit begins.

So a lot of times in, in real estate, in any type of large purchase, we’re focused on the actual transaction. And that is important. It’s super important. But what we want are benefits over the term. And so when we look at the problem set here with co-buying and co-ownership, and, and again, let’s just be super clear on what we’re talking about when we’re talking about CoBuy.

In our nomenclature, that’s when two or more people who are not married to one another team up, they purchase a home together. So financial participants, that can include people who are occupants or non occupants or any mix, co-ownership is just the corollary, you know? What happens when those co-buyers become co-owners when they close on the home?

And so when we look at it through this lens, we can take it, take, take it up one level and be like, okay, well this is a co-ownership lifecycle. This is a journey of three phases. You have co-buying, the day you close you have co-ownership, and that ownership period lasts until the day you exit and exit can take different forms. So let’s say the three of us are buddies and we buy a home together. There’s different ways that this, that this partnership if you will, can end or come to a conclusion and we know that it’s gonna come to a conclusion because we all die.

So the format through which we own this thing. This, this home is eventually going to come to an end through either death, full or partial sale or transfer or some other sort of exit. And that’s another thing we want to think about. So we’re helping people tackle this entire life cycle holistically. Like how do we, how do we co-buy intelligently, then how do we set ourselves up for successful co-ownership over the term, which means we’re seeing a return on our inputs. People think about the financial capital, but that’s just one investment from our side. We’re investing our financial capital, we’re investing our time, we’re investing our energy. And then how do we set ourselves up for a successful exit as well.

So when you ask about problems, it’s that the entire institution of home ownership in the US and in most of the world is based on a faulty assumption. And that’s that the buyers or the buyer is a single entity. So a married couple under the law, single entity in many regards. And we’ve provisioned for that from a, in our society on the legal side. You know, divorce is not pretty, but we, we do have processes for how we handle things like divorce and death when a spouse dies and another spouse survives them. We don’t have those processes in place for co-owners. And that’s, that’s a, a key kind of point from which a lot of the difficulties cascade down.

[00:07:32] Fred Glick: I always get the question from non-married people, like, “Oh, how should we take title?” Yeah, there’s a whole bunch of different ways. Your thing solves that problem. You explain it and then they understand it and then they, and then they fit that in as opposed to contacting a lawyer and having them discuss it or just putting it on ChatGPT and asking.

So.

[00:07:54] Drew Thomas Hendricks: I would think, like, so just as an unfamiliar person, if I was to go into a legal agreement with someone to purchase a property, purchase a business, I’m gonna set up an LLC, an LLP, I’m gonna figure out and have to have an attorney drop all this contracts, especially with another partner. Like what happens if they get divorced?

Am I stuck with a spouse that I don’t like? I mean, so your, your problem solves all that? And they don’t have to do a, like an LLC?

[00:08:20] Matt Holmes: So you guys raised a lot of great points and this is the, the crux of it is that this stuff’s really complicated. And first we need a framework to even talk about and think about this. Because the threshold for success is quite high. The magnitude of what you’re doing when you buy a home, you guys know very well it’s big, it’s a huge investment for most people. It’s their largest investment today, certainly for first time buyers, and it’s leveraged. So we can answer all of those questions that you guys just asked, but a lot of the answers are contingent on inputs, right?

So if people don’t have a framework and they start just, you know, pick and mix answering these questions, not only is it not efficient, it’s not effective, why is that bad? Because we have invested financial capital time, energy. What we have is a multi-party investment with living as a service layered on top.

So we’ve got money, emotion, we’re leveraged, and our relationships are involved. If this blows up, it can be really bad for all of us. We can lose our shirts, we can lose our nest egg, we can go bankrupt, we can destroy our closest relationships. Those are the things that most co-buyers and co-owners are not aware of because they don’t get reported as much except when it happens to a celebrity.

And there’s a lot of reasons for that. But that’s something that we’ve started tracking actually. Some of those internally, it’s not, you know, it’s not a great word, but like horror stories, like ownership gone wrong. And we’re, we’re helping people do a number of things. We’re helping people first and foremost avoid those situations, but go through this efficiently and effectively.

So to answer all these questions, like let’s go layer deeper into the framework, we have a lot of baskets of consideration if we’re thinking of co-buying and co-ownership as a three phase lifecycle. And if we’re thinking of it as multi-party investment management. And why is it multi-party investment management? Again, because we’ve got multiple parties, joint investment, shared upside, shared downside, and then living as a service. So if this is a, a primary residence, then at least one of us is gonna call this place home.

You asked about an LLC. Well, Fred will tell you that getting an LLC funded for primary residence is gonna be tricky from a traditional lender.

[00:10:48] Fred Glick: It’s worthless.

[00:10:49] Matt Holmes: Exactly. Yeah. And you can try and get clever about it and say, “Okay, well we’re gonna transfer title, you know, the day after closing.” But like, then you’ve got, you’re triggering your due on sale clause, right? So you can’t do that. So an LLC is out the door for the vast majority of our customers.

 Other thing like on, on that point, and I’ll take the questions in turn. And we, you know, we can explore, but being clever about our structuring is not the goal. Not only does that put us oftentimes in a precarious position, legally, financially, you know? But simple is good. There’s already a ton of complexity and we think of those buckets of consideration.

We’ve got financial, we’ve got social, we’ve got legal, we’ve got risk, we’ve got operational day-to-day, just how do we manage this, this asset, this investment, which has an asset side, but it also has a liability side, the mortgage, right? And then we have to think about the exit. So what we’re doing is taking all of these considerations and making it easy for people to build informed consensus, to align, to get on the same page, and stay on the same page, and protect everything that they put into this.

So their money and their relationships and their home. And so when we think of it in those terms, then it becomes a lot easier to manage and answer a lot of those questions that you guys just fired off. And that’s what happens in the wild. People say, “Okay why don’t we buy a home together?” And there’s different reasons for that.

But then they have a bunch of questions. Sometimes they go in circles because like we said, a lot of the, the answers to these questions are contingent upon other answers. And it’s like, “Okay, well what happens if…” well fill in the blank? Like, “What happens if one of us wants out?” Well, that depends on a lot of things.

Do we have a, do we have a framework for how we deal with that, that we’ve decided X and T, like upfront? Have we codified that? And so it’s much bigger than just a legal agreement. And Fred, I think you mentioned lawyers, you know, attorneys contracts. First off, like a contract is an artifact that can be helpful if you want to take things to court.

But if you want the full power of an agreement, what you really need is the intention and the consensus. And so creating an agreement is actually something that most co-owners, I mean, I would say any co-owner definitely wants to do. And there’s different types of agreements, but just getting a, a templated document, you know, there’s not a whole lot of value in that.

I’d say, if you don’t have the intention and the consensus upfront, and that’s just one asset.

[00:13:29] Fred Glick: It’s all about context.

[00:13:32] Matt Holmes: Yeah.

[00:13:32] Fred Glick: Everybody’s got a different situation and different things that are going on with them and different ideas about it. I mean, the bottom line really is like, I have buyers who are, you know, boyfriend, girlfriend, buy a house, boyfriend cheats on her, girlfriend cheats on him.

They decide they wanna break up, but one wants to keep the house the other doesn’t. How does it happen? They have to realize that the one has to qualify for the mortgage and how it’s all done, and who pays the utility bills, who takes out the trash? Yeah. It’s all the practical stuff. And that’s what you’ve kind of been able to do with this. So, Matt, can you vanilla run through, somebody comes to your website, boyfriend, girlfriend or boyfriend, boyfriend, whatever, and decides they want to go through what’s kind of, what are the questions they’re asked and kind of what do they get?

[00:14:25] Matt Holmes: Yeah, absolutely. So we just released the CoBuy Wizard. And it’s a great place to start. So we, we talked about how we wanna build consensus upfront, really like from the moment this, again, let’s say the three of us are friends. We wanna buy a place together. From the moment we decide this is something we want to look at, we need to create a plan, right?

So we can use a lot of simple frameworks, but we don’t have to get heady about it. If we’re going to embark on this journey together and we look at it through the lens of ownership is like a business with living as a service layered on top, then there’s three things we want to do. We want to plan, we want to structure and we wanna manage.

So it all starts with planning. And Fred, you and I were talking the other day. You’re right, context is key. Everything’s about context. So we want to establish that context. And that means because there’s three of us with different financial inputs, right? It’s a rare day in hell when two people have the exact financial inputs, like the exact same financial inputs.

Net income, net assets, credit, et cetera. We have different preferences and we have different goals. And so this is really complex. What we hope people do is just make it easy so people can come to the CoBuy Wizard and go through this flow that helps them fill in the blanks and then understand where they’re on the same page and where they’re not.

And that’s a great starting point for all parties involved, primarily for the co-buyers, for us. But also it’s helpful before going to a real estate agent and the lender to get on the same page because in some cases we have some work to do. Maybe one of us has some work on our credit we need to do, or maybe we are not aligned about what we’re contributing in a financial sense and how that’s going to translate into a relative ownership interest.

So if we just start this process, if tonight we say the three of us, yeah, we want to buy a place together and we just head to a lender to get pre-approved, there’s a lot that we haven’t discussed. We’re helping people fill in those blanks. So you come to the Coby Wizard, you answer questions that start with personal descriptive questions, then individual financial questions so that we can get a firm basis. And then we go on to kind of some of the more fun stuff about like, what does a target property look like to get us on the same page.

And then some of the questions about ownership itself, like how long do we each envision this lasting? And there’s a number of things there where we might assume that we’re on the same page, but if we haven’t talked about it, you could be damn sure that one of us is coming at it from a different angle than the others.

So that’s what the CoBuy Wizard does. It helps people, it’s

[00:17:15] Drew Thomas Hendricks: How long does it take someone to do this, to fill out this wizard.

[00:17:20] Matt Holmes: So it can take as little as 20 minutes if we’re all on our phones and ready to go. Sometimes people want to take longer, and complete it over the course of weeks because some of these things actually deserve to be talked about or considered offline.

And we’re not trying to enforce tech or an app on people. What we’re helping people do is have those difficult decisions. And sterilizing joint decision making. Why do I say that? It’s because it’s way easier to fill in some of these gaps when we’re guided, rather than sit down and be like, “Well, shoot Fred, you make a lot more money than I do.”

So how, how? You know? “And Drew, I don’t even know how much you make. So we’re all gonna go, you know, equal into this.” Right. Like it’s gonna be third ownership, third ownership, third ownership. For some people that can be an uncomfortable discussion to have. And if you think of the case of like an unmarried couple, you know, maybe one partner makes a lot more than the other and has a lot more in terms of assets than the other one.

Some people have no, no problem discussing those things, but some, some people find it a bit easier if they’re guided through this process to fill in those blanks and doing this independently and or together. Right. But like knowing that all of it is surfaced.

But when there’s that process that’s developed by domain experts and says, “Look, this is how this works and this is how it works best, and here’s why you need to get on the same page about each of these decision points.” It becomes a lot easier. It’s kind of like going to the doctor. Nobody wants to drop their drawers and cough twice, but if the doctor’s like, “Dude, we’re gonna need you to drop your drawers. You know, here’s why.” You’re like, “All right doc, let’s roll.”

[00:19:17] Fred Glick: So in the end, they end up with an agreement.

Correct?

[00:19:22] Matt Holmes: So that’s the first.

[00:19:24] Drew Thomas Hendricks: It seems like. So they fill out all the information and then you’re gonna punch the numbers, figure out almost a, it seems like there’s almost a little bit of like a, for lack of a better word, couples the aspect to it. And you’re gonna align everybody. ‘ Cause you’re gonna get a decision brief. The CoBuy decision brief within 48 hours.

Tell us what sort of expert or AI or how, how, how you’re making this brief.

[00:19:47] Matt Holmes: That’s right. So, we go through this process. We complete the, the culmination, the end of the CoBuy Wizard, which is just like the very start of CoBuy, right?

It’s the start of the planning phase, is once we’re on the same page about a discreet number of key issues. And that’s not everything. Like, we’re not trying to help people solve every possible decision point upfront.

[00:20:13] Fred Glick: Like who takes out the trash.

[00:20:15] Matt Holmes: Exactly. Yeah. Because, you know, it depends from group, from CoBuy group to CoBuy group.

And when I say that, I mean like any combination of people who are going through this process that could be an unmarried couple of just two people. That could be two married couples and a friend of five people, right? But any CoBuy group going through this process, they’re gonna have different decisions that they’re gonna wanna make.

To Fred’s point, some people are gonna want get really granular about setting roles, rights and responsibilities, but others aren’t. So the CoBuy Wizard focuses on, on the main, on the real important stuff upfront, and it culminates when everyone’s on the same page with, with an alignment check. So once we’ve got on the same page about, about a lot of that kind of core stuff, then what happens on our end at CoBuy is we created a CoBuy decision brief, and within 48 hours we send that back. That includes a CoBuy risk assessment.

So, you know, what does, what does this look like from a risk perspective? We’re also helping people understand their eligibility and viability. This is key. So eligibility is from a financing perspective. Based on our individual and cumulative financial inputs, do we have what it takes to qualify for a loan to buy the type of property that we want at a, at a high level? And that’s important again because like, what if, you know, we may all have jobs, we have incomes, we have reasonable credit, but let’s say we live in, or we wanna buy a home in Seattle and we’re only gonna be able to qualify for a $500,000 mortgage and our combined down payment is a hundred thousand.

Like, we’re, we’re not there yet. Because if we want a three bedroom in a certain area of Seattle, you know, we’re not gonna be able to get anything based on our financial inputs and, and how much we can borrow. So eligibility, then viability, and that’s more of a social sense. Are we on the same page about the key stuff?

There’s a lot of potential deal breakers. So if I’m thinking to myself that this evaluate eligibility, viability, and potential risks co-ownership, I only want it to last three years because I know for three years I’m gonna move to Europe and I, you know, that’s my timeline. And you guys are thinking there’s no way that we want to sell or transfer inside of three years.

And, you know, there’s ways we could deal with that, right? We could decide upfront like, we want to rent, we’re okay renting out my room at that point. But if not, like, this could be a deal breaker, our disparate views on timeline could be a, a massive deal breaker. So there’s no point in going forward at that point.

And that’s a big thing is like sometimes helping people understand that co-buying isn’t for them, is a win. In fact, that’s, that’s a huge win because we’re saving time, money. It’s certainly also useful for all of the professionals in the residential real estate vertical because if this is not a good idea for us from an eligibility perspective or a viability perspective, then what’s the point in going and spending much of time going homes? Or, you know, getting approved.

So we’ll, we’ll send it back. That decision brief, which kind of gives you a, a high level view on what the risks are, what the next steps are. If the co-buyers are up for it, we can connect them to CoBuy certified pros in, in real estate and lending. And so these are pros who, we’ve sourced, vetted, and certified who understand CoBuy and co-ownership and operate at a higher level.

Both from an ethics point of view but also from a performance point of view, and certainly from a domain specific point of view. Because this ain’t your typical transaction. And that’s the whole point here is co-buying isn’t just about a transaction, it’s about success over the full term, the co-ownership lifecycle. And the average real estate agent, the average loan officer, just isn’t qualified or incentivized to be a good addition to the deal team in that sense. And so that’s why we have folks like Fred as CoBuy Certified Pros on the roster, and so we can connect you to a CoBuy Certified Pro in lending in real estate.

We also have our, so CoBuy Wizard is free. Anyone can go and check it out. You go through this process. And it, you know, you can do it at any time. Like I said, you can complete it in as little as 20 minutes. A lot of people decide to take longer and it’s really, the forcing function is like how motivated are all the people in the group.

And that’s another thing is like, sometimes you have a straggler. Oftentimes you have someone who’s, who’s motivated to get this through. And you might, if in a group of four you oftentimes have like one person who, you know, hasn’t checked their email, they’re too busy. That doesn’t mean that they don’t, they’re not motivated to see make this happen.

But, so you can imagine we’re like in the wild without any sort of framework, without any sort of guidance. This can get really messy. And that’s just the start. Later on, we also have Co-ownerOS™ , which is a really cool tool.

[00:25:28] Drew Thomas Hendricks: So they’ve, they’ve done the wizard, they figured out that they want to arrange an agreement and CoBuy facilitates a legally binding contract? Without the next,

[00:25:39] Matt Holmes: Let’s actually talk about co-owners now because the agreement comes later. You do want to, you do want to get, build consensus around a lot of the key issues that are going to populate an agreement, but creating an agreement at this stage is premature.

So, as we’re going, as we’re going through the purchase process, search, negotiate, transact, we wanna start thinking about the agreement, but the agreement is something that is created through going a level deeper on all of these issues. So that’s where we get into some of the more granular stuff.

Fred mentioned taking out the trash, which is pretty granular. But if we want to think about some, some policies, right? And that sounds official, but if we want to think about like, do we want to implement a guest policy? Now that may not be relevant, thinking about something so granular to an unmarried couple, but if we’re a group of three friends in our twenties or thirties, it may be something we want to define.

So do we want to say that we have a guest policy whereby no one can think that that’s trivial, but it’s, I think back to when I lived with my best friend Ernesto for 10 years in my twenties in both London and then New York, and then London again. At a few points during those 10 years, most of which we were working professionals, I saw how my roommate, my best buddy can get a girlfriend and all of a sudden she effectively lives with us.

But that, that wasn’t the intention upfront. So something like a guest policy is something we may want to consider, but do we want to consider that like very, at the very beginning of this process? Probably not. That’s, that’s pretty granular. So agreements come later. And that’s what Co-ownerOS that’s one of the things that Co-ownerOS helps people do is go through a deeper level of consensus building. The output of which is a co ownership agreement, a memorandum of agreement, and those things can be created digitally, from anywhere, you know, using a phone. I think they can also be digitally signed and executed and then updated anytime.

And why that’s important and, and I appreciate you guys, there’s been a big focus on like agreements, contracts, that’s great. And people latch onto those things because they’re artifacts and, and people are familiar with, with contracts. But again, I can’t stress enough like how important the underlying consensus is because if we’re on the same page, we agree, then it is important to have that agreement as to, to codify it, to make this official.

But the idea is never to go to court and an, an agreement, a contract, that’s constructed intelligently, keeps you out of court. But if we’re thinking of this in a remedial sense, like if we go to court, only the attorneys win, right? That’s not the goal. So we do want these agreements, but we want the agreements in, in a prevention sense and really in a consensus building sense. And I don’t know, like did before, you know, in your lives, have you guys ever lived with roommates?

[00:28:54] Fred Glick: I don’t remember. You’ll have to excuse me for that.

[00:28:59] Matt Holmes: Drew, you ever live with a roommate?

[00:29:02] Drew Thomas Hendricks: Yeah. No. I’ve, I’ve definitely had roommates, I’ve had ex-wife, I’ve had wives. There’s always things going wrong and it’s good to have clarity, which I assume their Co-ownerOS is providing that clarity amongst the parties and surfacing questions that they might not yet consider.

[00:29:19] Matt Holmes: Absolutely.You hit it on the head is clarity, transparency, and guidance.

And so making sound decisions is, is actually tough. Like in a business, it can be difficult to make decisions. Human interactions are, are difficult, but they’re far more challenging when we’re working on the basis of unknown unknowns.

[00:29:44] Drew Thomas Hendricks: That’s helps with the clarity that eventually leads to a memorandum of an agreement and all this.

And it’s what an annual pass is what you, how it’s phrased and it’s like a living way I’m assuming an annual pass is something that survives the entire contract where you need to constantly be updating it and it’s gonna morph and become just constantly evolving. Is that the way it, is that how that operating system kind of works after the sale?

[00:30:12] Matt Holmes: Yeah, so once, once the three of us are in the process of, of searching for a home, if we’ve decided we want to go forward and that’s a big if. So we need to make a go, no go call. And not everyone decides that they’re gonna move forward. And there’s different reasons for that. Maybe it’s because we surfaced a deal breaker.

Maybe it’s because we don’t have the required financial inputs collectively to purchase the type of property that we want, in the neighborhood we want, size we want, state of repair that we want. Maybe we decide that we’re not on the same page about some fundamental stuff. And that could be timeline, that could be ownership as well.

If we do decide that we want to go forward, then once we kick off the search process and we have fully underwritten financing approval, this is a great time to sign up to Co-ownerOS. Co-ownerOS is, we’re gonna be guided through a flow. First off, it’s gonna verify our IDs. It’s gonna help us get on the same page about, about these key issues. It’s a dynamic workflow. So we, maybe we don’t need to talk about taking out the trash if we’re an unmarried couple, maybe we do.

 But it’s a dynamic workflow that helps us understand what we do need to talk about, crystallize those things, get clarity, modify them with a ownership agreement, a memorandum of agreement. And from there there’s some other cool features. But if, if we want to make changes over the term of our co-ownership, we can do that.

So we don’t have to necessarily go to an attorney to change a line item on our co-ownership agreement. We can do it from the couch or anywhere from our phone and re-execute that agreement. So it’s streamlining the consensus building phase, it’s streamlining the provision of those agreements and the execution of those agreements, which is really important because a piece of paper with the signature is not in and of itself a valid agreement.

[00:32:11] Drew Thomas Hendricks: No, that makes sense.

So this is, this is a very interesting commercial for CoBuy, but let’s talk about like exactly some of the challenges that you’ve seen over the last 10 years of people entering into agreements. Something that people can kind of grab to and relate.

[00:32:26] Matt Holmes: Yeah. Yeah. So a lot of people don’t always think about the day-to-day. We call it the management of co-ownership.

But, we have a lot of, a lot of things we need to do, jobs to be done as co-owners to. We have to think about taxes. We have to think about exit, we have to think about paying bills, tracking documentation, so you know, homeowner’s insurance, warranties.

Normally there’s other considerations on the insurance front as well that we may not consider upfront. So how are we gonna, how are we gonna manage all of this? Payments, expenses, documentation, and scheduling as well, because a lot of these things have to happen on timelines. For some people that’s easier or harder. It’s generally a function of how many people are involved as well. So if there’s four people, then things like paying taxes, property taxes can get a little bit trickier. And that’s, that’s something that, that we hope people do. And to the extent that that’s easy to do and get right, and we have information we need to make those decisions and execute those tasks without really thinking about it.

And things are gonna go more smoothly. So there are kind of two, theres, there’s three big reasons that people came up to buy and own a home. And the first, like, what are the buckets of motivations here? One is financial, two is social, three is just the desire to own a home. But money matters.

And that’s why I asked you guys if you’ve ever, you ever had roommates. Money can cause problems. Money issues are big when we’re not on the same page about who’s paying what If we’re not clear and we’re not tracking, you know, what our contributions have been. And if we’re not clear about what the expectations are, the responsibilities are on a financial front, then we’ve just like massively increase the sample space of what can go wrong. Money kills relationships.

So if we can get clarity on money upfront during the transaction and for the lifetime of co-ownership, then we’re winning.

[00:34:42] Fred Glick: That’s the biggest thing in all this. I think, you know, someone listening to this is thinking, “Oh well, you know, I’m gonna put in this amount of down payment, they’re gonna put in that, and, you know, what’s our percentage ownership and how do we get out of it in case we break up.”

And that’s usually the biggest fear that they don’t think about. They’re, you know, they’re all in love and you know, they’re not thinking about what happens when, you know, three years down the road, you know? So.

[00:35:09] Matt Holmes: Absolutely. Well, and even on an ongoing sense, right? So you hit on the key things and the more obvious ones, but we take out a mortgage, the three of us, and let’s say that I have a girlfriend, so let’s say it’s four of us.

So we have to, we have to pay our mortgage. And that mortgage payment to the loan servicer needs to come from a single account. So already we’ve got a challenge that people aren’t thinking about. We need a single account for the four of us, or we need to be, we need to have direct debit set up to one person who then makes payment on behalf of all of us for our, our monthly mortgage payment.

Do you guys see anything that could go wrong then?

[00:35:46] Fred Glick: And, yeah. And who gets the tax write offs because of that?

[00:35:51] Matt Holmes: Exactly. And how does that work?

[00:35:53] Fred Glick: Your real estate taxes and how it all work? Yeah, exactly.

[00:35:55] Matt Holmes: How does all work? So there’s a lot of stuff that trickles down from that financial side of things that people aren’t thinking about.

Why is that bad? Because on the spectrum of possible outcomes, things can go really well or really poorly. And when we think of this as a financial investment with living as a service layered on top, potentially, then all of those money questions, those money matters become crucial. They will determine the outcome over the term.

So you asked, Drew, about like, let’s make this real for people. Well, if we want return on our investment, even if this, even if we don’t see this as a pure financial investment, but like most people, if you ask them, would they rather see a return on their invested dollar here or not? They’re gonna tell you at the margin, they’d rather see their net wealth go up versus down, right?

So we should start to care about how do we insulate ourselves about against what could go wrong. So with that monthly mortgage payment for instance, we have in our little hypothetical group of four, a number of points of failure. Let’s crack that, right?

At the beginning. Yeah, like deciding how, you know, do we need a joint bank account? Do we need a joint savings account as well? Thinking about an emergency fund because things break unexpected costs and expenses arise.

[00:37:23] Fred Glick: That is a great point, Matt.

‘Cause if you buy an condominium, part of your condominium fee goes into a reserve fund.

[00:37:30] Matt Holmes: Yeah.

[00:37:30] Fred Glick: And the reserve fund is determined by a reserve study says, okay, in 20 years the roof’s going to go, you need to replace it. So you need to collect $200 a month so that you’ll have enough money in 20 years. You can kind of do the same thing here.

[00:37:46] Matt Holmes: Absolutely. And that’s exactly what we’re doing. So that’s why with, with Co-ownerOS, what it’s designed to do is just help people get on the same page and create a robust plan. The output of, of that process and, you know, v one of that process, our agreements, those agreements are living documents.

And that’s another sticking point is like agreements are just a reflection of the plan. It’s kind of like a business. You know, you have business docs. Those docs in and of themselves are not your business, but they are important. So when we have that plan, we have an a framework for operating this thing, for paying our bills, for tracking who paid what, when for ensuring that we have a process in place for, you know, what if I fail to make my monthly contribution to the joint bank account, which is something we need to consider.

Or if, let’s say we’ve got direct debits to Drew set up and Drew’s paying the monthly mortgage on our behalf every month. What happens if I fail to make my payment next month? Do we have a, do we have a fallback in place for that. So that’s something where an, you know, you could call it an emergency fund.

We call it a reserve account, but a separate joint account that’s capitalized could come in really handy. Such that if one of us is on, you know, maybe me and my girlfriend are on holiday and, you know, I don’t have direct debits set up. I do things manually or, or I have direct debits set up and my account wasn’t funded for whatever reason. Should you guys be penalized because I failed.

Innocent or not to fulfill my monthly obligation. And that’s just one of the things we have to pay for. There’s a lot of stuff we have to pay for and we want to track it all as well. We want to track it all because transparency and clarity incentivizes good behavior, but it also protects against the cases in which something goes wrong.

[00:39:42] Drew Thomas Hendricks: And suddenly I found very helpful and people should go to this, go to Cobuy.io. And go to the risk calculator. It really helps paint in very vivid terms, what the CoBuy operating system, how it helps you mitigate risk.

[00:39:58] Matt Holmes: Yeah. Thanks. That’s, we have, we have some calculators. We also have some interesting articles on our blog.

 From our perspective, it’s helpful to think of things with a risk management hat. And that’s not always sexy to talk about, but when we view this like a business, if we’re think, if we’re coming at it from a risk perspective, then we’re not only covering our downside, but we’re increasing the likelihood that the financial outcome is successful for all of us. Which also mitigates some of those opportunities for us to have disagreements or worse. And by the way, we don’t have to disagree. We don’t have to fall out in order for things to go poorly. There’s a number of ways in which negligence or failure to perform certain tasks or live up to certain responsibilities on any of our parts or collectively can end up in a bad result.

And what’s one of those? Well, if we’re on a mortgage to, if we took out a mortgage, the four of us to buy this home, we’re joint and severally liable. So if one of us dies, the survivors are still on the hook for the outstanding balance. That’s not something a lot of people think about. Why is that important?

Because we talked about how legal constructs assume an individual or a married couple. So you potentially have an asset liability mismatch if one person dies in co-ownership and you haven’t structured ownership intelligently. Tail risk, certainly. Does it happen? You betcha. When somebody dies, the others are on the hook for the mortgage outstanding balance because we’re joint severely liable, but they don’t necessarily inherit the corresponding equity on the asset side if we haven’t structured this intelligently, and this is where professionals in the residential real estate value chain through negligence or worse are neither equipped nor incentivized to advise on how to take and hold title on how to structure ownership.

And if we don’t have that plan in place, you guys may find yourself, if my girlfriend and I are on vacation in Thailand and we both die, you may find yourself co-owning your primary residence with my buddy Ted. With no mechanism to, you know, deal with that in the near term. And maybe you don’t like Ted. So that could be a problem.

[00:42:43] Drew Thomas Hendricks: Yeah, that makes sense. And we’re kinda winding down here, but I have to ask this question ’cause I want me, I personally want some clarity. How is the blockchain used for the smart contracts? Are you tokenizing this asset? Are you just storing the fact that an agreement was made?

[00:43:04] Matt Holmes: Yeah, so, in short we are using blockchain in several ways. One, for identity and for off. Two, for digital signatures and consensus. And then three for documentation as well. So we have a document vault where people can store their ownership agreement, their memorandum of agreement but also all artifacts. So all documents, receipts, insurance policies, warranties that relate to the property. And why that’s helpful is if we hold all of this stuff in digital format. Maybe I have some of these docs on my Google Drive to which you guys do or don’t have access, or we’ve got some hard paperwork and in a cupboard somewhere and the house burns down.

And physical documentation also can, can be fudged, right? So you always think that the people who are your friends or your lover are honest but there’s a number of ways in which physical documentation fails the litmus test of longevity.

And you do see instances as well where someone like, you know, fudges the documents retrospectively. With blockchain powered documents, you can’t do that. So we have a, a single source of truth. We abstract all that away because, you know, co-buyers, co-owners understandably don’t care about that. But it is powerful in a protection sense and it certainly reduces the scope for human error.

And brings down the costs drastically as well. So you get a certificate of completion for your co-ownership agreement. Each version, which says, these are the four people who signed it at this time, their idea was verified. And there’s a reference to blockchain, that is immutable. So yeah, it’s bringing down costs, it’s making things simple, and not something that we like highlight massively, but it’s incredibly useful for multi-party investment management.

[00:45:18] Fred Glick: It’s a beautiful thing.

[00:45:20] Drew Thomas Hendricks: Oh, I can see that.

[00:45:21] Fred Glick: In the word blockchain is the word lock.

[00:45:26] Matt Holmes: I love that. I never thought of it that way, but it’s true. Right? Yeah. Yeah, it is true. So, so are we using smart contracts? Yes. Under the hood? Are we tokenizing the asset? No, but we are creating an on chain representation, a unified representation of co-ownership, as, as an entity.

[00:45:50] Drew Thomas Hendricks: It’s there if you need it. But if you don’t need it, you don’t need to look at it. It is just there. If the shit hits the fan, you can prove.

[00:45:58] Matt Holmes: Absolutely. Absolutely. You don’t need to, you don’t need to worry about it. It’s there for functional purposes.

[00:46:06] Drew Thomas Hendricks: Very good.

[00:46:07] Matt Holmes: Exactly.

[00:46:08] Drew Thomas Hendricks: As we wind down, this has been a real super interesting episode and time flew by. What are some of the last kind of takeaways that someone could take from this meeting?

[00:46:19] Matt Holmes: Yeah. Absolutely. Plan, structure and manage. If you wanna buy a home together, think of this as a long-term thing, and we hope you do that.

We help you make your co-ownership simple, safe, and protected over the term. So you can just head to cobuy.io/wizard to get started, but no matter how you approach it, start with a solid plan before you move forward. You’re gonna save yourself a lot of time, money, effort, and it’s protects everyone involved.

[00:46:52] Fred Glick: You know, this is, what this does is add everything we talk about. You get a fully underwritten pre-approved mortgage, which I scream to the, the rafters about all the time. I’ve now, we talked a few weeks ago to, this guy Michael from Rhino Insurance, get the house pre-approved for insurance now ’cause you need it.

But now if you’re co-buying, get CoBuy pre-approved. So, you know, it just makes everything go smoother. You know, you’re gonna have to do these things anyway. So, you know, that’s, that’s our whole philosophy. You know, be ready, be prepared, be over prepared and this is the way to do it. And it’s just another factor in buying real estate.

[00:47:33] Matt Holmes: Yeah. And agree more. And then the last thing is like, work with people who know what they’re doing. Just because, you know, someone who has a license in real estate or is licensed as a lender, like doesn’t, doesn’t make them the best possible professional for your case.Or

[00:47:50] Fred Glick: My favorite is, ’cause they have a cute Instagram.

[00:47:55] Matt Holmes: There you go.

[00:47:56] Fred Glick: Pick a real estate agent based on the quality of their Instagram posts. Okay. That means nothing. That means they have a creative, they’ve paid a creative person to do a really nice job of videotaping them. That’s all that means. It doesn’t mean anything else. It’s what comes out of their mouth and is in their brain as opposed to how pretty their faces. So.

[00:48:17] Matt Holmes: There you go. There you go. Well, thank you guys very much. This has been fun. I appreciate it.

[00:48:21] Fred Glick: Yeah, fabulous. Absolutely fabulous stuff.

[00:48:23] Drew Thomas Hendricks: Thank you so much. This has been another episode of We Fixed Real Estate